MicroStrategy CEO Michael Saylor says he had to borrow money from a bank to fund his company’s latest Bitcoin purchase because financial markets aren’t yet ready to invest in bond-backed bonds. BTC.
In a press release, economic intelligence firm MicroStrategy reveals that it took out a $205 million loan to buy more Bitcoin.
Silvergate Bank provided the loan through its Silvergate Exchange Network (SEN) to MacroStrategy, a subsidiary of MicroStrategy. The interest-only term loan is collateralized by BTC held in MicroStrategy’s collateral account.
MicroStrategy chief executive Michael Saylor said the loan gives the company an opportunity to strengthen its position as “the leading public investor in Bitcoin.”
“Using the capital from the loan, we have effectively turned our Bitcoin into productive collateral, allowing us to continue to execute our business strategy.”
MicroStrategy owns nearly $6 billion worth of Bitcoin.
Saylor tells Bloomberg in a new interview that the company took out a loan because financial markets aren’t ready to accept Bitcoin-backed bonds.
“I’d like to see a day when people end up selling bitcoin-backed bonds like mortgage-backed securities. The market isn’t quite ready for that right now. The next best idea was a loan futures from a major bank.
One of the biggest current supporters of bitcoin bonds is the government of El Salvador, which announced plans for a futuristic new project “Bitcoin City” in November after making BTC legal tender two months earlier.
To fund the city, the government plans to issue BTC bonds and has partnered with bitcoin developer firm Blockstream to prepare them for investors.
However, the deployment of these obligations would face legislative delays.
Bukele announced a series of legal reforms involving Bitcoin in late February, but local publication La Prensa Grafica reports that the country’s Congress has yet to receive the necessary laws to implement the bonds.
Saylor tells Bloomberg that the Central American country’s BTC bonds will have risk outside of Bitcoin.
“There is a lot of talk about the El Salvador Bitcoin bond. It is a hybrid sovereign debt instrument as opposed to a pure bitcoin cash game. This has its own credit risk and has nothing entirely to do with Bitcoin risk itself.
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Feature image: Shutterstock/Alberto Andrei Rosu